Have you been struggling to repay debts on credit card, bank credit, store card, school loan, utility bills, and others? The problem can easily get out of hand and hold you captive for years. The debts will pull down your credit score and make it difficult to get services from many companies. In fact, even phone companies will not agree to enter into a contract with you because of the inherent high risk. You must take action to rectify the situation as immediately as possible. One way of doing this is getting a debt management plan.
A debt management plan (DMP) is a special arrangement between a debtor and creditors to clear off non-priority debts. The plan is overseen by a manager who agrees to deal with all the lenders and creditors on your behalf. This means that no more calls will be directed to you demanding payment of cash borrowed a few years or months back.
What are the main benefits of using debt management plans?
(i) All the debts are simplified into a single monthly pay
To keep the level of stress that comes from juggling multiple monthly bills, the debt management plan expert helps to consolidate all the loans into a single monthly payment. He will reach to all creditors and agree on the date of meeting the payments without having to reach the debtor. Note that this is not debt consolidation. All the debtors are handled individually at a specific time of the month.
(ii) The debtor enjoys reduced interest rates
The moment you agree with a DMP firm, the creditors will immediately see the commitment to clear the entire debt. This prompts them to lower interest rates, removing penalties attached for late repayment, and even over-limits. In some cases, the creditors can even mark the overdue accounts as current accounts after seeing the consistency. Because the DPM manager is an experienced professional, he will negotiate for other benefits and communicate to you.
(iii)Faster debt clearance period
As the DPM manager professionally negotiates with creditors on your behalf, the interests and other fees will be reduced. The burden of the monthly deductions will be reduced so that more cash will be directed towards clearing the current debts. The overall impact is that the debts will be cleared faster so that you can start marching to financial freedom.
(iv) Building the credit score faster
One of the biggest factors that pull down your credit score is outstanding debts. If you have defaulted on most of them, the credit score will be very low, and no financial institution will agree to work with you. However, the selected debt management plan will help you to clear the debts fast and raise the credit score. The DPM will also help you to understand credit score and build a positive credit history.
By identifying a good DPM company, you can rest assured of taking the problem of debts head on and emerging a victor after some time. This is the first step towards walking to financial freedom.